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(STICKY) Hamududu urges govt to clarify mining tax

Hamududu urges govt to clarify mining tax
By Mutale Kapekele
Tue 16 Nov. 2010, 03:59 CAT

THE government should tell the nation when the mines will graduate to tax paying positions, parliament estimates committee chairperson Highvie Hamududu has said. Apart from Kansanshi, almost all the mines in the country have not been paying tax claiming that they have not yet recovered from the losses they incurred when they made their investments.

Hamududu said the mines would contribute 30 per cent to the country’s revenue if they all graduated to a tax paying position, a 28 per cent improvement from the sector’s current contribution of two per cent.

Recently, Kansanshi Mine graduated from its eight-year carry over tax losses and contributed most of the US$1.6 billion revenue that has so far been collected from the mines.

“The government should explain its difficulties in revenue generation. Otherwise people will continue to complain,” Hamududu said during the Economic Association of Zambia (EAZ) business forum.

“The government is not clear on mining taxation. They have argued that they removed windfall tax because windfall prices can go away and that taxation must be long-term, but they have not been clear, they must be clear on their positions. We might not agree with them but they should be clear.

“They should tell us when all the mines will come to tax position. For eight years Kansanshi had a loss carry over but now they have graduated and from just that one mine, we have managed to raise so much revenue. Imagine if all the other mines were contributing, how much are we going to raise. We will generate as much as 30 per cent for the tax basket from the mines.”

He said the government had not given a knowledgeable argument on the developments in the mines.

“It’s not that they don’t have an explanation, they do,” said Hamududu. “The problem is that they are simply not making their argument clear when they talk about the new tax regime and the variable corporate tax which they claim is better than windfall tax.”

The government has argued that people who are calling for the windfall tax have a poor grasp of taxation issues or basic economics.

The government claims that the removal of the windfall tax will not lead to loss of government revenue as the variable tax still captured any windfall gain that may arise in the mining sector and the latter took into consideration the costs of production.

But several experts have argued that windfall tax was easier to implement than variable corporate tax.

History has proved that countries that used profit variable taxes had trouble getting accurate profit figures because it is easier for companies to hide them through inflated costs whereas in a windfall tax, the government and citizens can monitor the profits.

Labels: HIGHVIE HAMUDUDU, MINING, TAXATION, WINDFALL TAX

posted by MrK @ 6:08 AM